Interesting and useful site. Thanks, Scott.

Does that mean that the editor of Go Dog Go! made a mistake?

Exactly. I put Reagan in a different category than these nut jobs.

Andrew
Not many choose to remember Reagan raised taxes to save our economy. I suppose that I'm the only one old enough to remember that he was the host of Death Valley Days too.

Raised taxes.
Removed banking regulation (though to be fair Clinton continued this. Reagan however set the course.)
And made so many public mis-statements that there was an entire book of them: http://www.amazon.com/Reagans-Reign-Erro......94756444

This selectivity and fallibility of human memory is the reason they generally wait awhile post-death to declare anybody a Saint.

Regan the man is long forgotten. Which is too bad because there were some good things about him, too. Regan the symbol is alive, well and politically useful.

Oh yes, he took over after the Old Ranger.

When young kids today hear Regan stories they all must think that he was at least 10 ft. tall. I remember "bed time for bonzo".

Al, please post proof, for your statement "Reagan raised taxes to save our economy".

According to an article at Forbes:


John

It took a Canadian to post the real facts. Some of us have selective memories, but of course we all know that Dutch Reagan really was over 10 ft tall.
Thanks John

According to an article at FORBS: http://blogs.forbes.com/peterferrara/201......oriesbox

FORBS: Reaganomics Vs. Obamanomics: Fallacies Offered By The Left From watching and participating in debates over the years regarding Reaganomics, patterns of logical fallacies and factual errors repeatedly arise among critics on the Left. As the troublesome facts demonstrating the failures of Obamanomics accumulate, we find that almost religiously minded supporters of President Barack Obama can’t deal with those facts, and exhibit analogous logical fallacies.

But if we are ever to restore traditional American prosperity, we must get beyond those fallacies and errors.

Most fundamentally, many insist that they do not understand how tax rate cuts promote economic growth. As discussed in my column last week, Reagan reduced the top marginal tax rate from 70% when he entered office, all the way down to 28%. He cut all the other income tax rates by 25% across the board. Then in the 1986 tax reform, he consolidated all the lower rates into a single 15% rate, effectively the income tax rate for the middle class.


The tax rate, particularly the marginal tax rate, which is the tax rate that applies to the last dollar earned, determines how much the producer is allowed to keep out of what he or she produces. For example, at a 25% tax rate, the producer keeps three-fourths of his production. If that rate is increased to 50%, the producer keeps only half of what he produces, reducing his reward for production and output by one-third. Incentives are consequently slashed for productive activity, such as savings, investment, work, business expansion, business creation, job creation, and entrepreneurship. The result is fewer jobs, lower wages, and slower economic growth, or even economic downturn.

In contrast, if the tax rate is reduced from 50% to 25%, what producers are allowed to keep from their production increases from one-half to three-fourths, increasing the reward for production and output by one half. That sharply increases incentives for all of the above productive activities, resulting in more of them, and more jobs, higher wages, and faster economic growth.

Moreover, these incentives do not just expand or contract the economy by the amount of any tax cut or tax increase. For example, a tax cut of $100 billion involving reduced tax rates does not just affect the economy by $100 billion.

The lower tax rates affect every dollar and every economic decision throughout the economy. That is because every economic decision is based on the new lower tax rates. Indeed, the new lower tax rates affect every dollar, or unit of currency, and every economic decision throughout the whole world regarding whether to invest in America, start or expand businesses here, create jobs here, even work here, because all these decisions will be based on the new lower tax rates. Tax rate increases have just the opposite effect on every dollar and economic decision throughout the economy and the world.

In addition, marginal tax rates do not just affect the incentives of those to which the rates currently apply. They also affect those to which the rates may apply in the future. For example, consider a small business owner. If he invests more capital in the business to expand production, or hires more workers to increase output, that may result in higher net taxable income. It is the tax rate at that higher income level, not at his current income level, that will determine whether he undertakes the capital investment, or hires more workers.

These are the reasons why the dramatic reductions in tax rates under President Reagan were the central factor in creating the dramatic turnaround in the economy that grew into the astounding, historic, 25-year Reagan boom, though the change in monetary policy was critical as well.

The most intellectually coherent argument of the critics is that the Reagan boom was really just the effect of the large deficits during his years in office. The largest of those was $221 billion in 1986. But borrowing $200 billion out of the economy to spend $200 billion back into the economy does nothing to promote the economy on net, nor does it do anything to change the fundamental incentives that drive the economy. That has been proven over and over, in America and around the world, for decades. That continues to this day, for if government deficits were the key to promoting economic growth, today’s economy would be booming more than ever, with President Obama’s own 2012 budget projecting a deficit for this year of $1.65 trillion, or $1,645 billion for the numerically challenged.

The Reagan boom was extended to 25 years with the help of other rate cuts. The Republican Congressional majorities, led by House Speaker Newt Gingrich, cut the capital gains rate by nearly 30% in 1997. President Bush cut the Clinton era tax rates as well, with the bottom rate slashed by a third to 10%, and the top rate cut to 35%. Bush also cut the capital gains tax rate by 25%.

Critics have the most fevered difficulties in dealing with the facts regarding the effects of these Bush tax cuts. They quickly ended the 2001 recession, despite the contractionary economic impacts of 9/11, and the economy continued to grow for another 73 months. After the rate cuts were all fully implemented in 2003, the economy created 7.8 million new jobs and the unemployment rate fell from over 6% to 4.4%. Real economic growth over the next 3 years doubled from the average for the prior 3 years, to 3.5%.

In response to the rate cuts, business investment spending, which had declined for 9 straight quarters, reversed and increased 6.7% per quarter. That is where the jobs came from. Manufacturing output soared to its highest level in 20 years. The stock market revived, creating almost $7 trillion in new shareholder wealth. From 2003 to 2007, the S&P 500 almost doubled. Capital gains tax revenues had doubled by 2005, despite the 25% rate cut! That should not have been a surprise. Capital gains revenues rose sharply after the Gingrich capital gains cuts in 1997.

President Obama likes to pretend that a third of his trillion dollar stimulus involved tax cuts too. But those “tax cuts” all involved temporary tax credits which are economically no different from increased government spending. Indeed, a majority of the Obama “tax cuts” were “refundable” income tax credits, which involve sending a government check to people who do not even pay income taxes, economically indistinguishable from increased government spending. That is why even the federal government’s own official beancounters account for such refundable credits in the federal budget as spending rather than tax cuts. Such tax credits do not have the incentive effects of rate cuts explained above.

When President Reagan came to Washington in 1981, the top 1% of income earners paid 17.6% of all income taxes. By 2007, after a quarter century of tax rate cuts under Reaganomics, the top 1% paid 40.4% of all income taxes, close to twice their share of income.

In part, that was because at the lower tax rates the higher income earners took so much more of their incomes in more flexible taxable income rather than in tax exempt forms. That has been erroneously disparaged as the rich getting richer under Reaganomics, when it was just the same income in different forms. At the lower rates, upper income earners did invest and otherwise work to earn more, which of course is exactly the desired effect of the rate cuts, and so paid higher taxes on the resulting incomes. This is why Jack Kemp always used to say if you want to soak the rich, cut their tax rates.
Read the rest your self.

So Tom do you agree with John, or are you moon walking?

I take no stand on what counts as wise economic policy, apart from very obvious things. All I was doing was providing a source that documents Ronald Reagan's 1981 tax cut, and this subsequent tax increases.

I will say that you can't cut taxes indefinitely unless you abandon government altogether. And you can't raise taxes to absurdly high levels, because that destroys all the benefits of a free market. It turns out that lots of countries have tried lots of rates in between and are constantly tweaking to respond to world events. But that doesn't make for very exciting arguments, does it?

John

or the that pandas don't eat shoots and leaves?

Al, I have not posted my opinion and the main reason I have not, is because it is really not important and would surely be disrespected any way. I will say raising taxes, cost Bush 41, his greatest loss.

Well I'm glad that no one here is disagreeing with history.

Putting the two Forbes articles together, it would appear that Reagan eventually reduced some marginal income tax rates (after earlier raising them), but at the same time raised some business taxes, payroll taxes, and energy taxes.

So Tom and John are both correct, and everyone is a winner!

Peace being made here and now, and so soon before the May 21 Rapture! Yay!

Wait a minute, does that mean that none of us will be around for Bob Dylan's 70th birthday on May 24th?????

As a whole, RR cut tax rates. THIS is history. You can cherry pick any liberal wacko bs you want to try and sully the mans reputation, you can be a wise mouth lib and call him all sorts of names Al, but YOU are the one who can't manage to figure out history.

I think going back to the idea of the cold war and spending us into oblivian on military would not be so bright right now. It worked like a charm, but today is a new day.

See Al, using cherry picked wacko information to try to prove some point about what is happening right now is just bleary eyed. It makes no sense. President Obama is in a much different situation right now. Historically cutting taxes results in more revenue. BUT that assumes that taxes are high enough to allow for cuts in the first place. The Laffer Curve makes sense if applied AFTER the fact. We need a perfect balance between what the government needs, and what they want, and what people need and what will cause more of them to be in the work force. I don't think it can be applied to find the right number in the future, but as I said more of a judge of the past.

I for one would be happy if our President was to embrace RR in action instead of just name. Pretty pathetic you have to invoke the name of the most hated conservative in history, and lie about his legacy just to justify the Obamamessiah.

OK, just for the record, Ronald Reagan did not spend us into oblivion. Obama is doing that. Reagan's last deficits were on the order of 150 million dollars, declining from over 200 million dollars during his middle years. Accounting for inflation, that means today's deficit should be 280 million dollars. It's 1.6 trillion now, nearly six times larger!

Ronald Reagan practically doubled revenues to the treasury during his term. Tax revenues are a function of economic growth and not tax rates, for the most part. But tax rates provide an incentive for economic growth along with reductions in regulation which we also need.

Carrie